With the European Union and the UK headed for recession and
inflation hitting levels not seen for a generation, the economic outlook
at the end of 2022 could hardly be gloomier. Businesses face spiraling
energy and raw material costs as consumers tighten their belts and
public sector spending is kept in check.
Inflation is not the only challenge. Global supply chains have not
recovered from the shock of Covid, while worker shortages are also
hindering growth.
As businesses fight to preserve their margins, will they cut back on
investment in digital transformation? This is what happened during the
Great Recession of 2008-9, when global IT budgets shrank by 6%.
The simple answer to this question is: no. A resounding no.
In terms of technological change, 2008 is a lifetime ago. B2B
businesses no longer regard eCommerce as a cute addition to
traditional sales models, but understand that it is core to their growth
– or indeed survival. During the pandemic, the brands and wholesalers
that adapted best were those with an evolved eCommerce culture and
platform. B2B has not forgotten this lesson.
There is a firm expectation that businesses will continue to ramp up
investment in digital transformation, even as we fall into recession,
with a recent Gartner1 survey indicating that almost 70% of CFOs have
firm plans to do so.
The rise of B2B eCommerce was unstoppable before Covid, which
put it top of mind for B2B decision makers. The myth that most B2B
businesses do not “do” eCommerce has been well and truly busted,
with nearly two-thirds (65%) now offering end-to-end online purchases,
up from 53% at the beginning of 2021. For the first time, B2B sellers
are now more likely to offer eCommerce channels than in-person
selling.
Many of the trends we see for 2023 recognize this inevitability.
Omnichannel and personalization are not new trends of course but
we include them here for two reasons. First, these are now musthaves. Businesses that have not yet committed to omnichannel and
personalization risk falling behind, as more agile competitors are
better able to respond to unstable market conditions.
Other trends we are flagging up, such as social selling, embedded
payments, AI-powered cross- and upselling, have already made an
impact in B2C which means it cannot be long before these innovations
are leveraged by B2B.
The potential for growth in B2B eCommerce remains enormous, as
just 12.5% of business-to-business sales are transacted online. The
trends we see for 2023 will help you capitalize on this potential, and
help position you to profit from the economic upturn when it comes.
Social media does not belong to B2B
influencers; in B2B, businesses are using social
media platforms to heighten brand awareness,
signpost leadership initiatives, and engage
customers with live LinkedIn events.
Increasingly, brands are using social media
not just to advertise but to sell. This segment
was pioneered in China, but is rapidly gaining
ground elsewhere, especially in the US and in
the United Kingdom.
For a niche UK skincare brand, Mallows Beauty,
a two-hour live shopping event on TikTok
brought in more than a week’s worth of sales at
its flagship store in Cardiff. For furniture maker
Snug, an interactive, shoppable Instagram live
stream attracted 40,000 comments in just over
half an hour. The commercial opportunities
of Augmented Reality (AR) on social media are
just beginning to be explored. On Snapchat, AR
lenses enable visitors to “try on” makeup and
send the images to friends. Snapchat describes
this innovation as “catalog-powered shopping
lenses” to make the purchasing process more
experiential.
All the digital giants are getting in on the act.
Pinterest links “shoppable” pins with product
reviews and notifies you when a pinned product
has been reduced in price. Twitter Shops allows
brands to showcase up to 50 products on their
Twitter profile, turning the platform into a space
where people buy products as well as talk about
them. Amazon launched a social commerce
initiative in 2019, where brands can live-stream
product demos and other innovative content.
According to Amazon, its Prime Day 2021 live
streams were viewed by tens of millions of
customers.
Social media converts. In a survey of Dutch
consumers, 42% had placed an order through
social media over the past year. Unsurprisingly,
the younger you are the more likely you are
to have been influenced by social media posts
and advertising; 45% of Generation Z have been
inspired to buy by social media, a figure that
tails off to 40% for millennials, and 35% for the
next cohort down, Generation X.
The assumption has to be that Generation Alpha
will be even more strongly guided by social
media.
As always, it is B2C that is setting the agenda,
and pioneering the change, but social selling is
a trend that B2B cannot ignore because the B2B
buyers and decision-makers of tomorrow will
demand it.
In 2008, during the last recession, B2B leaders
were still arguing that modern eCommerce was
far more suited to B2C, but as a new generation
of millennials began to take the reins, this
distinction became meaningless.
Generation Z has entered the world of work and
it won’t be very long until the first TikTok cohort,
Generation Alpha, matures from B2C shoppers
to B2B stakeholders.
B2B businesses that can leverage the power of
social platforms to create new sales channels
will be tomorrow’s front-runners. Those that
ignore this trend will find themselves in the
same boat as the B2B decision-makers who
thought omnichannel was a buzzword and did
not invest in it.
Those businesses are playing catch-up now
Last year, McKinsey’s annual survey of B2B
sentiment, the first since the global economy
emerged from the disruptions of the Covid
crisis, produced a game-changing set of
statistics. Or rather, its landmark findings
showed the game had changed already, and
forever.
B2B decision-makers indicated that in a typical
transaction its stakeholders engaged with 10
distinct channels before contacting the supplier
directly, up from “just” five in 2016.
This means that businesses have to find a way
to talk to buyers and potential new buyers long
before they can engage with them in person.
Not only that, you have to present the buyer
with the same story, the same price, and the
same real-time inventory position everywhere
– on your site, your social media, your physical
shop, your customer support center, in your
emails, and so on.
To make omnichannel marketing a reality you
need eCommerce technology that allows you
to interact with your customers across every
channel where you are active at any time of day.
B2B buyers no longer tolerate a situation where
the website tells them a product is in stock but
the sales team emails you it isn’t.
This is a huge source of friction. Increasing price
transparency means that competitive battles
are won increasingly in the arena of the B2B
customer experience.
Businesses have got the message loud and
clear. One of the key findings of the McKinsey
survey is that almost all B2B decision-makers
(94%) now recognize that omnichannel is
equally or more effective than the traditional inperson sales models. Before Covid, acceptance
of B2B omnichannel stood at just 65%.
Businesses continue to sell across a mixture of
channels which for the time being is fairly evenly
distributed between the face-to-face, remote,
and digital self-serve transactional models. But
in this hybrid content, eCommerce is now seen
as the single most effective way for B2B to sell.
As we said in our introduction, omnichannel is
less of a trend and much more of a must-have.
Or to turn it upside down: a strong trend for
2023 is the competitive demise of businesses
that have not taken steps to implement
omnichannel marketing.
And this is equally true for personalization.
The B2B customer does not browse or search
your website for fun; he is there to do a job.
The easier you make that job, the more loyal he
will be to you – and this is the most important
aspect of personalization as it is expressed in
B2B.
You can’t tempt B2B buyers with an impulse
purchase, not least because there is usually
no such thing as a single buyer. But you
should still be able to make relevant product
recommendations, not because this is a product
that the buyer doesn’t know he needs, as is the
case in B2C, but because he needs it urgently.
This is crucial in today’s context of supply chain
disruptions and goods shortages. If an order is
late, a modern eCommerce platform, integrated
with the ERP and the fulfillment infrastructure,
can keep the customer informed of this. While
delivery delays are usually not a matter of life
or death in B2C (although you’d never know it
from the reaction of some retail customers),
in B2B they can have serious consequences.
Omnichannel B2B implementations give the
customer a real-time view in all the channels
where he wants to find it.
Personalization kicks in when you are able to
suggest an alternative product with an earlier
delivery date, or even the same product sourced
from a warehouse with surplus stock which
is closer to the factory, office, or distribution
depot of your customer. If the product is not
available for order to begin with, a chatbot – or
a “real-life” sales representative – could step in
with a personalized suggestion, based on the
customer’s order history, and the products he
has searched or browsed before.
There are many ways in which personalization
makes life easier for your customer. You can
segment for accounts-based selling where
customers are presented with prices and
inventory data based on their individual account
history and price agreements.
Many sellers have assortments with many
thousands, sometimes hundreds of thousands,
of SKUs but few customers for whom the entire
product catalog would be relevant. If your
eCommerce platform has a native PIM module
or integrates easily with third-party solutions,
you can personalize your catalog, and make
light work of product searches.
The same is true for content. If the customer
sees content that is relevant to him without
having to look for it, the experience becomes
much more frictionless. You can personalize
content in the backend of your platform by
segmenting it for a certain buyer persona, so
that once a customer logs in, he is immediately
presented with a relevant homepage and
homepage banner, as well as with promotional
discounts that you know he’ll like.
Personalization has always been the
cornerstone of B2B, because the face-to-face
model personalized sales to a segment of one.
B2B buyers now want more autonomy in how
they research and transact their orders. They
interact with your sales reps much later in the
customer journey which means you have to
compensate “digitally” – through personalization
– to show the customer you understand his
needs and problems, and can be trusted to
come up with solutions.
Trust is the cornerstone of B2B relationships.
This is why omnichannel is crucial because if
you give your buyers contradictory information
their trust in you erodes.
Effective upselling and cross-selling relies on
trust, which is why B2B marketers must seize
every opportunity they get to create value
throughout the customer lifecycle. The statistics
could not be more explicit: the likelihood of
selling to a new prospect is somewhere between
5% and 20%, while the probability of selling to
an existing customer is 60% to 70%.
Not only have you already done the hard work
of building trust, you have also collected a lot
of information about your customers – more
than you know. This is why Artificial Intelligence
has become an invaluable tool for B2C and B2B
marketing: it reveals relationships in the data
that were invisible before.
How do upselling and cross-selling work in B2B?
A regular customer of product A could be
persuaded to pay more for an updated or
more highly specced version – upselling. The
relationship is still key. Rather than dropping a
demo of the new product in the buyer’s landing
page, a sales rep could reach out to mention
the new product and the product demo to the
customer.
Upselling and cross-selling should never be
crass because B2B customers are savvy, and do
not buy on impulse.
Cross-selling opportunities or packaged bundles
of products and services should be positioned
as great commercial opportunities with timelimited discounts rising with each product addon ordered. You can create a sense of urgency
by throwing in free delivery if the order is placed
before a certain date.
What you offer should be based on data-driven
insights that can be taken to unprecedented
levels with the help of AI, which is able to spot
new cross-selling opportunities and devise the
best pricing tactic for each.
Before the eCommerce revolution, B2B sales
intelligence was “owned” by the sales team but
AI, it would seem, takes this power and this
usefulness away from them. One of the perils of
eCommerce is the marginalization of sales reps,
and the loss of their experience and knowledge.
However, far from shutting them out, AI allows
sales teams to carve out a new, much more
consultative role.
Armed with this tool, sales reps can intervene
meaningfully with upselling and cross-selling
opportunities that will really resonate with
buyers, and solve problems that they may not
have anticipated.
If you cannot surprise your buyers, you lose
the initiative; they will order what they came to
order, nothing more. AI unlocks insights that
were invisible to both of you, giving the sales
reps the authority and confidence to “interrupt”
the customer with new offers and opportunities.
B2B marketplaces are now the fastest-growing channel in B2B eCommerce. They grew 5.3x
over the past two years, during the pandemic,
and 7.2x more than B2B eCommerce as a whole.
This is a remarkable statistic.
As a proportion of all B2B sales, B2B
marketplaces now contribute 6.9%, up from
1.8% in 2020.
What accounts for this extraordinary
momentum?
First, marketplaces work. Businesses that built
one were more likely to have grown their market
share in 2021 than those that hadn’t. This
growth gap is 30%.
Covid accelerated adoption as supply chains
were disrupted – or even disappeared
completely – overnight. Brands and distributors
had to be quick on their feet in how and where
they sourced their supplies, and marketplaces
filled that need. Supply chains are still
dysfunctional, so it could be worth investing in
a marketplace that earns you a fee, even if you
cannot source the product yourself or deliver it
in the timeframe required by the buyer.
But the shift is more fundamental than that.
Even before Covid struck, the discussion about
B2B marketplaces was moving on from “should
we/shouldn’t we?” to a 360° view of how best to
leverage the power of the marketplace as part of
a broader, omnichannel strategy.
Every sales channel has its benefits and
disadvantages, and marketplaces are no
different.
B2B eCommerce is an ecosystem play,
with marketplaces one of many ways to
optimize your online “surface area”. The more
touchpoints you prepare for the customer, the
more likely it becomes you will be touched!
For a quarter of B2B buyers, a marketplace will
be their first port of call when they are searching
for new products. You might have a hard time
finding these customers in your other channels,
so marketplaces are a good opportunity to
become part of their purchasing journey early
on in that process.
Businesses can use marketplaces to expand into
new markets, perhaps through major platforms
such as Amazon Business, Faire, or Zalando.
Marketplaces can be a great way to try out
new products or new product ideas; if you get
traction you know it’s worth investing in this line
– and perhaps use the marketplace as a funnel
to drive traffic to your own site where you may
sell premium products and services.
Marketplaces may have been “invented” by
digital monoliths such as Amazon or eBay, the
technology has moved on to the point where
niche players can also launch them. A great
recent example is TheNextShop, a marketplace
for second-hand or “pre-loved” designer
clothing. This is a smart and appealing example
of the marketplace as an ecosystem of brands,
bolstered by a strong commitment to a trend we highlighted last year: sustainability.
Like the marketplace, this is now a must-have or
a must-commit for 2023.
One of the most marked differences between
B2C and B2B is the complexities of businessto-business pricing. Through an integration
with the ERP, eCommerce platforms can
personalize B2B prices to reflect the most
intricate contractual arrangements for discounts
and payment terms that tend to be particular to
each customer.
However, actual payment is another matter.
The fintech revolution has transformed the
way we navigate our personal finances, and
we have grown relaxed about using our money
apps to pay, invest, and buy foreign currency.
In B2C, payment has been made so intuitive
and frictionless, the illusion is created that no
money has changed hands at all. Sometimes
this is literally true, at least for 14 days, if you go
through a deferred payment app such as Klarna.
The classic use case of the payment revolution
is Uber which at a stroke removed the fuss and
inconvenience of settling a taxi ride.
This is a level of innovation that is as yet
inaccessible to B2B where 81% of businesses
still settle their invoices with paper checks,
at least occasionally. The amounts are much
larger of course but as an explanation of the
“payment gap” between B2C and B2B this seems
inadequate when 35% of B2B decision-makers
are happy to place orders with a value in excess
of $500,000 through an eCommerce platform.
But paying for those huge orders remains a
point of friction.
A recent survey of the attitude of B2B towards
the eCommerce payment experience revealed
the following:
Clearly, this is a huge issue for the sector which
is addressing the digital transformation of B2B
payment in a variety of ways. The first is to
automate Accounts Receivable processes, and
to leverage A/R as a core component of the
customer experience.
This move merely reflects the reality that A/R is
present throughout the lifecycle of the order,
from onboarding to payment – or failure to pay
on time. If an account is seriously past-due, it’s
often A/R that determines when to sever the
relationship.
By giving it an explicitly strategic role – and by
automating its routine tasks – A/R can focus on
creating loyalty-building payment experiences,
even when dealing with late-paying clients.
The payment technology with the greatest
traction in B2B is the digital wallet which
integrates with the accounting functions of
a business in order to simplify electronic
payments between it and its supply chain.
If your eCommerce platform is integrated with
your ERP, a path opens up for you to offer this
technology as a means of payment and payment
automation. This is because digital wallets
embed fintech functionalities into the ERP to
automate key financial processes. Increasingly,
they are partnering with global banks to enable
B2B to pay in different markets and in different
currencies, and so avoid the complexities of
working through multiple payment providers
and holding separate foreign bank accounts for
each currency.
One way to think about the uptick in digital
wallet usage by businesses is to consider it
as a “consumerfication” of B2B payments.
By reproducing the agility and elegance of
consumer apps, businesses can meet the
demands of its customers for friction payment,
while mining for efficiences in their own
payment and accounting workflows.
The headline economic outlook for 2023 is far from rosy, but
brands and wholesalers strategize with a time horizon of two to
three years.
We can make predictions – one of them is that inflation will return
to much more manageable levels in the course of 2023 – but no one
has a crystal ball. Who could have foreseen Covid in 2019, or the
invasion of Ukraine a few years later?
Nevertheless, with certain forecasts, we are on much firmer
ground. Generation Z and Alpha are coming of age and will drive
the development of eCommerce social media beyond what we can
imagine today.
The annual B2B transaction payments market exceeds $50 trillion
and is expected to rise steeply in the coming years so the incentive
for tech-driven innovation in this space is huge.
Finally, brands and wholesalers that do not commit fully to B2B
eCommerce and implement omnichannel and personalization on a
best-of-breed platform will soon cease to be relevant.
But this is not part of your plan.
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